Jake Robert Moore v Morrell Holdings Pty Ltd T/A Mr Rental

[2011] FWA 5727

[2011] FWA 5727

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jake Robert Moore
v
Morrell Holdings Pty Ltd T/A Mr Rental
(U2011/7691)

COMMISSIONER WILLIAMS PERTH, 26 AUGUST 2011

Unfair dismissal - minimum employment period.

[1] Mr Jake Moore (the Applicant) has applied to Fair Work Australia (FWA) for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (the Act) in relation to his employment with the Respondent, Morrell Holdings Pty Ltd t/a Mr Rental.

[2] The Respondent has objected to the Applicant’s application on the basis that the Respondent is a small business employer and that the Applicant has not completed the minimum employment period.

[3] The parties have provided written submissions in relation to:

• The period of employment served by the Applicant; and



• Whether the Respondent was a small business employer.

[4] This decision deals with this preliminary jurisdictional issue.

The evidence

[5] The relevant facts are that in September 2009, the Applicant commenced employment with Steve Finn Pty Ltd. He was employed by Steve Finn Pty Ltd as a “mobile representative” in the business known as Mr Rental, Balcatta.

[6] The Respondent offered to purchase Mr Rental, Balcatta from Steve Finn Pty Ltd in February 2011 with a proposed takeover date of 14 March 2011. A Sale of Business Agreement was drawn up by the parties and executed. As part of that sale agreement all employees were to be terminated by Steve Finn Pty Ltd prior to the takeover date.

[7] Steve Finn informed the Applicant of the takeover in a letter to him dated 24 February 2011 which explained the business had been sold to new owners and that the settlement day would be Monday, 14 March 2011 and at this time his employment with Steve Finn Pty Ltd would cease. The letter explained that the Applicant’s employment will then commence seamlessly with the new owners, the Respondent, on Monday, 14 March 2011.

[8] The Applicant however says he did not receive this letter but does not dispute its contents.

[9] The Applicant was informed in person by Steve Finn at the Balcatta office on 11 March 2011 that the following Monday, 14 March 2011 the Respondent would be the new owner. The Applicant did commence employment with the Respondent on that day and he worked as a “mobile representative” in the business known as Mr Rental, Balcatta until he was dismissed by the Respondent on 27 April 2011.

[10] The sale of business agreement under a heading “Recitals” says that:

“The Vendor has agreed to sell, and the purchaser has agreed to purchase, the business as a going concern (including all right, title and interest in the Assets) upon and subject to the terms, covenants and conditions contained herein.”

[11] Clause 1 Definitions and Interpretation of the sale of business agreement includes a definition of “Assets” which is to mean all of the assets of the business including the rental equipment, the truck, the plant and equipment, the contracts and the goodwill.

Submissions

[12] The Respondent says that he spoke to the Applicant about the ownership change and about plans to move to Malaga which the Applicant was okay with.

[13] The Respondent says he confirmed with the Applicant that he would have no accrued holiday pay or any other outstanding entitlements after the takeover. The Applicant signed a tax file number declaration for the Respondent as a new employee and received a new employment contract and job description.

[14] The Applicant disputes having received a new employment contract or job description however nothing turns on this.

[15] Shortly thereafter the Applicant complained that he was not happy to be on probation with the Respondent which the Respondent submits demonstrates that he was aware that there had been a change of employer and understood his position as a new employee.

[16] The Respondent therefore submits that the Applicant had been employed for a total of only 45 days with the Respondent at the time of termination. Further the Respondent says that as they employ only six full-time and one part-time employee they are a small business within the meaning of those words in the Act. Accordingly the Applicant has not completed the minimum employment period of one year which is a pre-requisite for the making of this application.

[17] The Applicant rejects the jurisdictional objection of the Respondent and says that what occurred here was that there has been a transfer of the Applicant’s employment from his previous employer Steve Finn Pty Ltd to the Respondent and so the prior service with Steve Finn Pty Ltd counts as service with the Respondent for the purposes of determining whether, under the Act, he has served the minimum employment period required to be entitled to make this application.

Consideration

[18] In order to be “protected from unfair dismissal” under section 382(a) of the Act, the Applicant must have completed at least the “minimum employment period.”

[19] Section 383 of the Act defines the “minimum employment period” as follows:

(a) if the employer is not a small business employer−6 months ending at the earlier of the following times:

(i) The time when the person is given notice of the dismissal;

(ii) Immediately before the dismissal; or

(b) if the employer is a small business employer−one year ending at that time.

[20] Section 23(1) of the Act defines the term “small business employer” as follows:

(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

[21] The Applicant does not dispute the Respondent’s contention that it is a small business employer.

[22] In this case then the Applicant must have completed a period of employment with the Respondent of at least one year to be able to make this application.

Period of employment

[23] Subsection 384(1) of the Act defines “period of employment” as follows:

(1) An employee’s period of employment with an employer at a particular time is the period of continuous service the employee has completed with the employer at that time as an employee.

(2) However:

(a) a period of service as a casual employee does not count towards the employee’s period of employment unless:

(i) the employment as a casual employee was on a regular and systematic basis; and

(ii) during the period of service as a casual employee, the employee had a reasonable expectation of continuing employment by the employer on a regular and systematic basis; and

(b) if:

(i) the employee is a transferring employee in relation to a transfer of business from an old employer to a new employer; and

(ii) the old employer and the new employer are not associated entities when the employee becomes employed by the new employer; and

(iii) the new employer informed the employee in writing before the new employment started that a period of service with the old employer would not be recognised;

the period of service with the old employer does not count towards the employee’s period of employment with the new employer.

[24] Section 22(5) of the Act sets out how continuous service is calculated in circumstances where there is a “transfer of employment”:

When service with one employer counts as service with another employer

(5) If there is a transfer of employment (see subsection (7)) in relation to a national system employee:

(a) any period of service of the employee with the first employer counts as service of the employee with the second employer; and

(b) the period between the termination of the employment with the first employer and the start of the employment with the second employer does not break the employee’s continuous service with the second employer(taking account of the effect of paragraph (a)), but does not count towards the length of the employee’s continuous service with the second employer.

Note: This subsection does not apply to a transfer of employment between non-associated entities, for the purpose of Division 6 of Part 2-2 (which deals with annual leave) or Subdivision B of Division 11 of Part 2-2 (which deals with redundancy pay), if the second employer decides not to recognise the employee’s service with the first employer for the purpose of that Division or Subdivision (see subsections 91(1) and 122(1)).

[25] If there has been a transfer of the Applicant’s employment from Steve Finn Pty Ltd to the Respondent then, subject to some exclusions, the Applicant’s service with Steve Finn Pty Ltd counts as service with the Respondent. If this is the case then the Applicant’s period of service with the Respondent is deemed to have commenced in September 2009 and ended on 27 April 2011, a period of more than one year.

Transfer of employment

[26] The term “transfer of employment” is defined in section 22(7) as follows:

There is a transfer of employmentof a national system employee from one national system employer (the first employer) to another national system employer (the second employer) if:

(a) The following conditions are satisfied:

(i ) The employee becomes employed by the second employer not more than 3 months after the termination of the employee’s employment with the first employer;

(ii) The first employer and the second employer are associated entities when the employee becomes employed by the second employer; or

(b) The following conditions are satisfied:

(i) The employee is a transferring employee in relation to a transfer of business from the first employer to the second employer;

(ii) The first employer and the second employer are not associated entities when the employee becomes employed by the second employer.

[27] There is no evidence that Steve Finn Pty Ltd and the Respondent were associated entities. Accordingly, subsection (b) above is the applicable subsection.

[28] In this instance there will have been a transfer of the Applicant's employment if the Applicant is a transferring employee, as defined in the Act, in relation to a transfer of business from Steve Finn Pty Ltd to the Respondent.

[29] The term “transfer of business” is defined in section 311(1) as follows:

There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) The employment of an employee of the old employer has terminated;

(b) Within 3 months after the termination, the employee becomes employed by the new employer;

(c) The work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) There is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

[30] I am satisfied on the facts provided by the parties and that the requirements of section 311(1)(a) to (c) have been satisfied in this case.

[31] In terms of the requirement in section 311(1)(d) the evidence of the sale agreement is that the first employer and the second employer entered into an arrangement whereby the Respondent would now own or have the beneficial use of the assets that Steve Finn Pty Ltd had previously owned and/or had the beneficial use of and that these assets relate to or were used in connection with the transferring work. The requirement of section 311(1)(d) has therefore been satisfied because as defined in section 311(3) there has been a transfer of assets from the old employer to the Respondent, the new employer.

[32] Given that the criteria in subsection 311(1)(a) to (d) have been satisfied I find that there has been a transfer of business between Steve Finn Pty Ltd and the Respondent.

[33] If then the Applicant was a “transferring employee” in relation to this transfer of business, there has been a transfer of the Applicant’s employment from Steve Finn Pty Ltd to the Respondent.

[34] The term “transferring employee” is defined in section 311(2) as follows:

An employee is relation to whom the requirements in paragraphs (311)(1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

[35] As the requirements in section 311(1)(a) (b) and (c) are satisfied, as set out above, the Applicant is a “transferring employee” in relation to the transfer of business from Steve Finn Pty Ltd to the Respondent.

[36] Thus, I find that as the Applicant contends that there has been a transfer of the Applicant’s employment from Steve Finn Pty Ltd to the Respondent and that the Applicant’s service with Steve Finn Pty Ltd counts as service with the Respondent. Any period between the termination of the Applicant’s employment with Steve Finn Pty Ltd and the Respondent does not break the Applicant’s continuous service with the Respondent and so the Applicant’s period of service with the Respondent is deemed to have commenced from September 2009 and ended on 27 April 2011, amounting to a period of employment of more than one year.

[37] There is no evidence in this case that the Respondent as the new employer informed the Applicant in writing before the new employment started that his period of service with Steve Finn Pty Ltd would not be recognized and so the exception set out in section 384(1)(b) of the Act does not apply.

Conclusion

[38] Because of the Applicant’s period of service with the Respondent is deemed to have commenced in September 2009 and ended on 27 April 2011 this amounts to a period of employment of more than one year.

[39] On this basis, the period of employment which the Applicant has completed with the Respondent is clearly at least the one year minimum employment period required to make an application for an unfair dismissal remedy in this instance.

[40] The Respondent’s jurisdictional objection is dismissed.

[41] I propose that a conference be convened to discuss whether this matter can be resolved between the parties or whether it will instead proceed to a full arbitrated hearing on the merits of the dismissal at a later date.

COMMISSIONER

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